The Hindu Business Line : DEPB credit goes online

EXPORTERS awaiting Duty Entitlement Passbook (DEPB) credit have reason to be happy, as the Revenue Department has operationalised online credit to exporters instead of giving them after physical verification of shipping bills by the Director General of Foreign Trade (DGFT), which subsequently forwards the same to it.

Speaking to Business Line, the DGFT, Mr K.T. Chacko, said that the online DEPB credit would be given to all exports executed from October 2005.

DEPB credit in a year is in the Rs 5,000-6,000 crore bracket and the expeditious clearance of DEPB credit online would vastly relieve exporters from running from pillar to post.Till now, after shipment of consignment, exporters had to send shipping bills to the DGFT, which would scrutinise the same and issue a certificate.

This certificate had to be forwarded to the Revenue Department for release of DEPB credit; this elaborate exercise entailed time and contributed to transaction cost to trade and industry.

Mr Chacko said that the online credit through electronic data interchange (EDI) would be implemented in all 23 ports and Customs houses as of now, and subsequently this would be extended to other areas too.

On the delay in the introduction of a new scheme to replace the DEPB scheme, the DGFT said that as per the suggestion of the Prime Minister's Economic Advisory Council, both the DEPB replacement scheme and the issue of "negative profit" exemption exercising the exporters have been resolved.

The Council has directed the Revenue Department and the Planning Commission to work out the modalities for the new incentive scheme, which would be ready in a couple of months, he added.

The Commerce Department is in favour of reimbursing taxes on electricity, petroleum products, entry tax, and Central sales tax incurred on inputs in export production, while the Revenue Department is reluctant to pick up the tab on these charges, as they are State levies. Hence, the issue was referred to the Advisory Council.

On the issue of "negative profit", the issue was what constituted negative profits and whether an assessee was entitled to claim exemption under Section 80 HHC of the Income-Tax Act in respect of export incentives when the export business, excluding export incentives, reflected a loss.

The Advisory Council, headed by Dr C. Rangarajan, favoured the exporters' demand on grant of "negative profit" exemption.

The exporting community has suggested an explanation under Section 80HHC of the I-T Act that related to profits directly derived from exports be amended on a retrospective basis from 1992-93 so that the tax authorities do not reopen past cases and harass exporters.

The DGFT said that the Revenue Department has been directed to bring an amendment to the relevant Act and till this is done, the exporters would not be subject to harassment from the hands of the authorities even as the deadline for this expired on August 31, 2005.

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